9911796707
TMI Blog2014 (4) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... to perform. Decision of High Court in case of Viswapriya Financial Services and Securities Ltd., vs. CIT [2002 (10) TMI 88 - MADRAS High Court] is also not applicable to facts of present case as in that case assessee actually made payment but did not treat it as interest - Do not find any infirmity in order of CIT(A). Further, perusal of Notification Number SO No.3489 dated 22-10-1970 makes it clear that provisions of section 194A of Act are not applicable to interest paid to company whose shares are held by either Central or State Government - Provisions of section 194A of Act will not apply to said company in view of Notification in S O No.3489 dated 22-10-1970 - Interest payment to such company is outside purview of section 194A an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see u/s 80IA of the Act, reopened the assessment by issuing a notice u/s 148 of the Act on 24-3-2009. 4. In course of reassessment proceedings, the Assessing Officer apart from holding that the assessee is not entitled to deduction claimed u/s 80IA of the Act made further disallowance on various counts one of them being disallowance of interest u/s 40(a)(ia) of the Act amounting to Rs.1,56,72,913. It was noticed by the Assessing Officer during the assessment proceedings that the assessee had paid an amount of Rs.1,56,72,913/- as interest to M/s Konkan Railway Corporation Ltd., on mobilisation advance. The Assessing Officer noticing that the assessee had not deducted tax at source on such interest payment, proposed to disallow he same by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the previous year. As per the said agreement, the contractee has to recover the amount pertaining to interest on such mobilization advances, by way of adjustment from the running bills submitted by the appellant. The manner of computation of the interest amount, while making the recovery towards interest, is indicated in Article- 28.5 of the said agreement. From the above agreement, thus, it is clear that the appellant was not required to actually make payment of the said sum to the contractee during the previous year. Under this circumstance and when no such amount has been credited towards interest to the account of the contractee in its books, I agree with the contention of the appellant that it was not possible in their case to deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount to the contractee M/s. Konkan Railway Corporation Ltd., but the amount was recovered from the running bills of the assessee. Therefore, it cannot be said that interest was paid by the assessee to attract the provisions contained under sec. 194A of the Act. It was further submitted that the Assessing Officer does not dispute the fact that M/s Konkan Railway Corporation is a government undertaking. Hence when all the shares of the company are held by the Central Government or State Government, then provisions of section 194A of the Act are not applicable in view of the Notification No. SO No.3489 dated 22-10-1970. Arguing further the learned authorised representative for the assessee submitted that even assuming that the assessee has p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, the CIT (A) has also noted that the assessee has not credited any such amount towards payment of interest to the account of the contractee in its books of accounts. In the aforesaid factual situation, it cannot be said that there is any violation of provisions of section 194A of the Act. A liability cannot be fastened on the assessee or a default cannot be attributed to the assessee for not discharging an obligation which is impossible on its part to perform. The decision of the Hon ble Madras High Court in case of Viswapriya Financial Services and Securities Ltd., vs. CIT (supra) is also not applicable to the facts of the present case as in that case the assessee actually made the payment but did not treat it as interest. In aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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